Subhash Challa has been the CEO of SenSen Networks Limited (ASX:SNS) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether SenSen Networks pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing SenSen Networks Limited's CEO Compensation With the industry
At the time of writing, our data shows that SenSen Networks Limited has a market capitalization of AU$106m, and reported total annual CEO compensation of AU$502k for the year to June 2020. That's a notable decrease of 26% on last year. In particular, the salary of AU$305.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$262m, reported a median total CEO compensation of AU$335k. Hence, we can conclude that Subhash Challa is remunerated higher than the industry median. What's more, Subhash Challa holds AU$6.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. There isn't a significant difference between SenSen Networks and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
SenSen Networks Limited's Growth
Over the past three years, SenSen Networks Limited has seen its earnings per share (EPS) grow by 82% per year. In the last year, its revenue is up 1.0%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has SenSen Networks Limited Been A Good Investment?
SenSen Networks Limited has generated a total shareholder return of 2.5% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Subhash is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 6 warning signs for SenSen Networks (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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